4.05pm: Dow has worst week since September
US stocks finished the trading week lower after hotter-than-expected producer price index data for November sparked further Federal Reserve interest rate hike fears.
At the close, the Dow lost 305 points to 33,476, while the S&P 500 eased 29 points at 3,934 and the tech-heavy Nasdaq fell 77 points to 11,005.
Notable movers included shares of lululemon athletica inc, which slid more than 12% after the athleisure wear maker offered up a weaker-than-expected outlook.
12:18pm: Holiday rally potentially on the horizon
At midday, the Dow was up 36 points, 0.1%, to 33,817, the Nasdaq Composite added 52 points, 0.5%, to 11,134 and the S&P 500 improved 11 points, 0.3%, to 3,974.
“While US factory-gate inflation points towards the need for still more rate rises, stocks can now scent the potential for a rally into the end of the month," said Chris Beauchamp, chief market analyst at online trading platform IG. "Such a bounce would repair more of the damage suffered in 2022, even if the post-Christmas blues do set in. The PPI data was unable to have much of a negative impact, although it does set us up for another hot CPI figure and hawkish Fed next week which might be much harder for markets to navigate successfully.”
Investors are looking ahead to next week's Federal Reserve meeting, which is expected to result in an interest rate hike of 50 basis points.
9.40am: Road to target inflation ‘likely to be a long one,’ analyst says
US stocks started Friday on the back foot after a higher-than-expected PPI reading for November spooked investors ahead of the Federal Reserve’s rate-setting meeting next week.
Just after the market opened, the Dow Jones Industrial Average had shed 60 points or 0.2% at 33,721 points, the S&P 500 slipped 7 points or 0.2% at 3,956 points, and the Nasdaq Composite was down 57 points or 0.5% at 11,025 points.
Forex.com market analyst Fiona Cincotta said the stronger-than-forecast PPI data raised questions over the extent to which the Fed could ease back from its aggressive monetary policy stance.
“Data across this week has broadly been stronger than expected,” she said.
“US nonfarm payrolls showed stronger job creation and higher wages, and the ISM services PMI was also ahead of forecasts, as were factory orders. With PPI also moving southwards at a slower pace than unexpected, the US central bank is likely to be more cautious about adopting a less hawkish stance towards monetary policy.”
Cincotta concluded: “The data suggests that the market has once again gotten ahead of itself and the road to target-level inflation is likely to be a long one.”
8.55am: Inflation report sinks stocks
Stock futures sharply reversed on Friday morning following the release of a hotter-than-expected wholesale inflation report.
After making gains earlier in pre-market trading, futures for the Dow Jones Industrial Average had slipped 0.4% and the S&P 500 and the Nasdaq Composite had both fallen 0.5%.
November’s producer price index (PPI) showed wholesale prices increased 0.3% last month, coming in higher than the consensus analyst expectation of 0.2%.
However, the PPI rose 7.4% year-over-year in November, down from the 8% recorded in October.
Titan Asset Management CIO John Leiper said, while the November PPI came in slightly above expectations, the year-on-year number was a continuation of the evidence of the last several months that inflation in the US is slowing.
“The big question now is whether inflation continues to fall to the pre-Covid range of 1% to 2%, or settles at a structurally higher level, say 3% to 4%,” he said. “We think the latter is the most likely outcome and the speed of reversion will be a key factor impacting asset prices next year.”
6.30am: US stocks set for second day of gains
Wall Street is expected to open higher as the market awaits producer inflation data that may provide more evidence that the US economy is cooling off, allowing the Federal Reserve to ease the pace of interest rate hikes at its last meeting for 2022 next week.
Futures for the Dow Jones Industrial Average rose 0.2% in Friday pre-market trading, while those for the broader S&P 500 index added 0.3% and the Nasdaq gained 0.4%.
Stocks ended higher yesterday, with the S&P breaking its five-day losing streak as an increase in weekly jobless claims numbers to the highest since February was taken as another sign that the Fed may tap the brakes.
Initial jobless claims for the week ended December 3 came in at 230,000, up by 4,000 from the previous week’s revised level and on par with the consensus analyst forecast.
The Dow Jones gained 184 points, or 0.55%, to 33,781, the S&P jumped 30 points, or 0.75%, to 3,964 and the Nasdaq rose 123 points, or 1.1%, to 11,082.
“US PPI figures due today will be closely watched after jobs data yesterday hinted at a loosening in the labour market that may suggest the Fed could be closer to its pause/pivot,” commented Neil Wilson, chief market analyst at Markets.com and Finalto.
“If inflation is easing, that’s one requirement for the Fed to start slowing the pace of hikes. The next would be the labour market – is it starting to cool, too?"
In addition to November’s producer price index, Wilson noted that the University of Michigan consumer sentiment index and inflation expectations data is out later.
"A month ago, the median expected year-ahead inflation rate was 4.9%, down slightly from 5% the prior month," Wilson noted.
"Long-run inflation expectations remained steady at 3%. The consumer sentiment data is expected to be barely changed at 56.9 from 56.8 before."